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DENVER, CO - The House today passed a bill sponsored by Representative Naquetta Ricks and Assistant Majority Leader Jennifer Bacon that would strengthen safeguards for HOA homeowners to help them retain the equity they built in their property and keep them safely housed. HB25-1043 passed by a vote of 38-24.
“Homeownership is an important way to build generational wealth, but our current laws allow HOAs to strip away everything Coloradans worked hard for, which threatens the stability of hardworking families,” said Rep. Naquetta Ricks, D-Aurora. “If a homeowner suffers from a medical emergency, loses their job, or experiences other financial hardships that impact their HOA payments, their home can be foreclosed and sold for just cents on the dollar, and the owner’s hard-earned equity disappears instantly. This bill helps create critical safeguards to ensure better notice, transparency, and accountability around HOA foreclosures so Coloradans can stay safely housed and protect their equity.”
“Colorado HOA homeowners, especially in my district, have had their biggest asset taken from them and sold at an auction for a fraction of its worth over sometimes very small amounts owed to the HOA,” said Assistant Majority Leader Jennifer Bacon, D-Denver. “It can be difficult to recover after a foreclosure, especially with high housing costs and no equity to fall back on from the foreclosed property. This bill would help prevent hardworking Coloradans from being senselessly displaced and ensure that homeowners can recover some equity from the house they paid for.”
In cases where an HOA pursues a foreclosure against a unit owner, HB25-1043 would allow an owner to file a motion with the court to stay the sale of their home at auction for up to nine months, during which time an owner could sell their own home. Currently, an HOA may sell the unit at auction for only the cost of unpaid assessments and attorneys’ fees.
Before taking legal action or referring an HOA homeowner to a collection agency, the bill would strengthen the requirement that an HOA have a written policy of sending a unit owner the HOA’s ledger verifying the amount owed within seven business days after a homeowner requests it. Under the bill, an HOA must also provide information about its ability to foreclose and force a sale of a unit through the HOA information and resource center before taking legal action against a unit owner.
The bill also requires an HOA to provide homeowners with a notice regarding the right to participate in credit counseling at least 30 days before initiating a foreclosure.
HOAs would be required to include additional information for the previous year when submitting their annual registration with the Department of Regulatory Affairs. This would include the number of unit owners who were late on payments of assessments, judgments obtained against unit owners, payment plans entered into with unit owners, and foreclosure actions filed by the HOA. Reps. Ricks and Bacon have passed numerous laws to protect HOA homeowners, including protections to prevent HOAs from easily foreclosing on homeowners because of late or unpaid HOA fines and fees and creating safeguards against foreclosure and protecting HOA residents from having to pay excessive attorney fees that can result from enforcement actions.